Good morning everyone and welcome to the Marcus Corporation Second Quarter Earnings conference call. My name is Keisha and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. If at any time during the call you require assistance, please press star followed by zero and an operator will be happy to assist you. As a reminder, this conference is being recorded. Joining us today are Greg Marcus, President and Chief Executive Officer, and Doug Neis, Chief Financial Officer of the Marcus Corporation. At this time, I would like to turn the program over to Mr. Neis for his opening remarks. Please go ahead, sir.

Thank you and welcome to our fiscal 2011 second quarter conference call. As usual, I need to begin by stating we plan on making a number of forward-looking statements on our call today. Our forward statements can include but not be limited to statements about our future revenues and earnings expectations, our future REVPAR, occupancy rates, and room rate expectations for our hotels and resorts division, our expectations about the quality, quantity and audience appeal of film products expected to be made available to us in the future, our expectations about the future trends of the business group and leisure travel industry, and in our markets expectations and plans regarding growth in the number and type of our properties and facilities, expectations regarding various non-operating line items on our earnings statement, and our expectations regarding future capital expenditures. Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks and uncertainties which could impact our ability to achieve our expectations are included in the Risk Factors section of our 10-K and 10-Q filings which can be obtained from the SEC or the Company. We post all Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that behind us, let’s talk about our fiscal 2011 second quarter results. We’re pleased to be reporting that the positive trends in our hotels and resorts division continued into our second quarter, resulting in significant year-over-year improvement from that division even after adjusting for last year’s impairment charge. Meanwhile, although our theater division is reporting a small increase in operating income, the fact remains that if not for last year’s one-time pension withdrawal liability charge, we would be reporting a decrease in operating results from this division during the quarter. But before I get…

Thanks, Doug. I’ll begin my remarks today with our theater division. After two consecutive years of record results in our theater business, we have now had two quarters in a row of reduced operating results. Disappointing, but certainly not unprecedented in this rollercoaster business. I think it’s fair to say that the theater business is in a little bit of a funk right now. As Doug shared with you, we’ve been up and down from week to week all year long, and Hollywood has just not been able to put a string of top performing films together. In fact, I don’t think we’ve had more than two consecutive weeks of year-over-year box office improvement during the first six months of our fiscal year. The result has been an inconsistent first half that has seen box office revenues essentially even with the prior year in total for 23 of the first 26 weeks, bookended by year-over-year decreases in the two weeks following Memorial Day and the week leading into Thanksgiving, time periods the studios traditionally have saved for some of their best offerings. As I indicated last quarter, there hasn’t been a lot of depth to films made this time around. While the final totals for calendar 2010 are not in yet, one of the problems has been a reduction in the number of films released during the year, a reflection at least in part of the reality that lack of financing over the past couple of years has resulted in less pictures being produced. As we have discussed in the past, part of this business is a numbers game – the more films released, the greater the odds that one or more of them will be hits with the movie-going public. The one or two extra blockbusters can make the…

Thank you. Ladies and gentlemen, if you have a question please press star followed by one on your phone. If your question has been answered and you would like to withdraw your question, please press star followed by two. Questions will be taken in the order received. Please press star, one to begin. We’ll go to the first question from the line of David Loeb representing Robert W. Baird. Please proceed. David Loeb – Robert W. Baird & Co.: Good morning, gentlemen.

Hey, David.

Hi David. David Loeb – Robert W. Baird & Co.: I want to start one with an easy one for Doug, kind of a housekeeping thing. The legal expense related to the Platinum that you mentioned was ongoing, did that go in the hotel operating expense line or in G&A?

It is—well, when you look at the segment data, it is in the hotel P&L; so when you see hotel operating income, hotel operating income has been impacted. If you’re looking at the SEC—the face of the earning statement, then it’s probably on that G&A line. I believe so. David Loeb – Robert W. Baird & Co.: Got it. Okay. But the segment data is what I’m paying more attention to.

Segment data, yes. It is in the hotel operating results. David Loeb – Robert W. Baird & Co.: So that’s really one of the reasons—that’s holding back margin gains, that’s one of the things as well as (inaudible).

Absolutely. Yes, as I indicated, it’s $700,000 year-to-date and so that’s a pretty significant number. David Loeb – Robert W. Baird & Co.: Yes. And just to continue on hotels, when do you—Greg, given the comments you made about group bookings and particularly in the fourth quarter, what’s the outlook for rate increases? Do you think you’ll be able to start seeing better rate increases in the third quarter and not in the fourth quarter, or do you think there’s enough transient business around that actually helps you start to push rates a bit?

You know, it’s so hard to predict, David. What we’re seeing—I can tell you anecdotally, what we’re seeing in that is that there’s a lot of pent-up group business that’s coming back, but—and the rates are marginally better but they’re not—but we’re seeing resistance. We can’t—we’re not able to at this point just really push real hard on the rate, but we are pushing on it. Corporate, market-dependent—50/50, some markets, depending on what the buyer has, what the restrictions may be, if they’ve got less opportunity, then they are susceptible to rate increases. If there is more opportunity, there’s still a fair amount of supply out there and so it’s not as robust. But it’s—you know, it continues to just move along and move along at a decent pace. But it’s what we’re seeing now – we’re seeing a lot of occupancy but not a lot of rate. David Loeb – Robert W. Baird & Co.: And as you stack in that additional occupancy, particularly the group, does it allow you to mix out some of the discount channel leisure?

Yes, it does; but we still—you know, we still fill it when we have to, when we can—I hate to say can, but when we have to. David Loeb – Robert W. Baird & Co.: Yeah. No, I get it. And then to switch over to the theater business, it sounds like you’re not overly optimistic about the film outlook. I guess you don’t think Yogi Bear can outperform Avatar.

Ha! I can say with some confidence that probably won’t happen. David Loeb – Robert W. Baird & Co.: Yeah. So when do the comps start getting easier?

You know, we’ve started seeing kind of this current little—you know, we used the word funk earlier for lack of a better word, late spring. I mean—

Shrek, Iron Man – nothing has really performed robustly in the last year.

Correct. I’d say the last one that really came out of the gate that was really robust and where everyone stood up and took notice was Alice in Wonderland, which was that March picture; and then after that, everything—you know, it wasn’t as if pictures didn’t do alright. They did; but just nothing that was very consistent. David Loeb – Robert W. Baird & Co.: Yeah, it does seem like there are a lot of me-toos and sequels. You get something like Avatar and Alice in Wonderland, they’re kind of different and they seem to find an audience.

Yeah, it really—I think, look at it. There’s a lot of factors that go into it, and no one can ever point to one thing, I think, when they talk about the film business. It’s sometimes, they all say, well business bad is bad, we don’t have any product. When business is great, we have a lot of product. Well, it’s a mixture of things. It’s the economy is a big chunk of it. So as the economy has gotten better, that—and people are out on the road and travelling more, that impacts the theater business. As the product—the product does run—it can be streaky, and I think that we’re in a little bit of a product funk. We haven’t seen anything that’s really been getting anybody too excited on the product side. And when those things all come together—and then, you know, we’re going up against some tougher comps, it—oh, and then as we talked about, the numbers game. That’s really interesting when you think about it. That may be one of the biggest things that people talk about, and it takes a few years to wind through the system and it works in both directions. But when you see—you always see people gear up for strikes. They start making a lot of movies in anticipation of a talent strike of some sort, and then there’s always a lot of movies in the pipeline if they don’t go on strike and then, boy, the numbers get really good. Right now—you know, there was a lot of sloshing around money that was financing films in Hollywood a few years ago that dried up, and so while they always get movies made, because movies do do okay – the studios figure out a way to make them – they make less of them. And when they make less of them, then not surprisingly we have less opportunities for success. And so all those factors combined are coming together right now, and it’s funny – as I tried to talk about in those comments about the forest for the trees, we are only going up against the best year in the history of the movie business last year of exhibition, when we cracked $10 billion in revenues. So this year has been pretty good when you look at it on a more macro scale on the revenues, but it’s going up against some tough comps, so. David Loeb – Robert W. Baird & Co.: Yeah, that all makes sense. I guess—is there a little bit of reallocation of the financing of those films that’s going into fewer films but bigger budgets, or more 3D?

There is—you’re right. There’s been a mix shift on the side of Hollywood where they’re making more—they’re going for the larger tent poles and we’re seeing fewer of the midsize films. But there’s less money in the industry to make movies.

Yeah, in fact David, it’s interesting. Where some of it is is not necessarily in the majors that we traditionally think of, but in some of the independent distributors. Just two years ago in 2008, there were—I’m looking at a schedule here that shows there were over 30 pictures released by MGM and Weinstein, that they virtually had nothing this past year. And some others have stepped up and maybe replaced some of it, but the indy—independent film distribution total has significantly dried up or has certainly declined, and that might make some sense from the money perspective. You know, that would be the first to go. David Loeb – Robert W. Baird & Co.: I guess last question on this and on everything for now – as you look at the lineup and the 3D mix within that, do you think that the pricing mix continues to trend a little bit higher as it generally has over the last year?

Boy, you have the crystal ball. You know, the pricing is moderating. We’re not seeing as much of the gains as we saw. Well, starting to lap it, too. So I don’t think that it’s going to continue to grow on the revenue side as much, on the ticket side as much, which for us might be okay because I’d like to see it come back to the concession side, so. It makes us more money there. David Loeb – Robert W. Baird & Co.: Okay, great. Thanks.

Ladies and gentlemen, again, if you wish to ask a question please press star followed by one on your phone. Your next question comes from the line of Gregory Macosko representing Lord Abbett. Please proceed. Gregory Macosko – Lord Abbett: Well, I guess I’ll ask a question.

Hey Greg. How are you doing? Gregory Macosko – Lord Abbett: Hey, fine. Just give me a little more color in the group bookings, just to understand that. We’ve talked to some others about that, and that there’s—you know, they may be stretching out a little bit, but any feeling for that? You kind of said the rates are a little tougher, but are they going out further or what’s going on there?

Yeah, you know, the color that I got—I spent some time with Bill Otto, our Division President, to get some understanding of this myself, and it’s still a lot of last-minute stuff, Greg. A lot of the improvement has been coming in with—I mean, every week the phone ringing with a bunch of our local companies and other ones, as Greg used the term, pent-up demand. Well, there’s some of that going on, but the thing that he stressed with me how last-minute a lot of it is still. So that would certainly be one of the additional pieces of color I would add, is that it still is not—we’ve had now, I think it was five months when we talked last time, so I think now it’s probably eight months of the pace being better than it was before. So that’s all good, and the rates that we’re negotiating are a little better than what they’ve been but the hardest part is just the visibility because it’s not just not that long a lead time on most of this. Gregory Macosko – Lord Abbett: What about—okay. I understand, yeah. That’s just good to get a sense of it. Talk about the pricing in the theater. That was up 2.9%. How much was that influenced by 3D? What’s the—I assume a lot of that was. Give me some color there.

That’s all. That’s most of it.

All 3D. We have not been very—we’ve made periodic adjustments to our pricing and we’ve got a—you know, we follow kind of a schedule in that regard, but we haven’t made significant changes. That’s probably mostly 3D—just a few more 3D films. You know, we are starting to—there still is overall a general uptick in the number of 3D films that are being released, but even that’s starting to—before, we were comparing against only having a handful of them, and now we’re going to have 20-some films that were released in this current calendar year. It will be 30 or so next year, so the pace of the year-over-year number of films is probably declining a little bit now. Gregory Macosko – Lord Abbett: Yeah, but still it’s going to be up. It’s going to be up in ’11.

It’s still expected to be up. Sure. So that’s why—you know, I think that’s why Greg answered the way he did, that we certainly—last year, though, or as recently as, I think it was in our fourth quarter, whenever it was, that we were reporting 7 and 8% increases in average ticket price. Gregory Macosko – Lord Abbett: Ah, that’s true.

(Inaudible) that’s going to be the case.

The other thing that’s going to keep us a little more moderated, and it’s because we have a conservative outlook, I would say, on what 3D means and where it’s going; and I think it’s still working its way through the business and what does it mean in terms of this—we haven’t had this severe a stratification in pricing that I can ever remember. Since I was a kid – I have to go back a long time. You know, what we bump into is we’ve deployed 3D through all of our complexes, or most all of them, all of our markets have it. We continue to cautiously add it where we can and when we think it has value. You know, as we’ve done recently—added it to our XL 3D, which is our ultra screen with a 3D version on it, which is a great presentation. But we haven’t just gone whole-hog crazy trying to get it everywhere, and so that’s a little bit of a governor on how much better we can do with it because they’re throwing enough product at it right now that we start to run into having to make trade-offs to what can play and when. And as we move along, unless we add more inventory, so to speak, more shelf space, we can’t put too much more inventory through ourselves. Gregory Macosko – Lord Abbett: I see. Okay. And then with regard to the sort of upgrade of theaters, you basically pulled the CAPEX expectation because you’re probably not going to make any acquisitions or do anything there in terms of theater, but is there still sort of upgrades going on relative to 3D in terms of that 30 to 40 you probably are likely to spend this year?

Well, actually all along when we’ve been talking about the dollar amounts, Greg, in capital spending, the 3D component has been pretty minor because to date we’ve been able to have, through a variety of different programs that have been offered through RealD and others, we’ve been able to keep the investments relatively small initially while we still seek a longer term digital cinema program, a VPF program. As we’ve talked about, you have to have the digital projector first, and so we’ve been continuing to work on identifying ultimately the long-term solution for that. So we have not had a lot of—the capital expenditure dollars we’ve been talking about have not had a lot in there for the 3D because it just hasn’t required that much additional. You are correct in noting that we had some money in those dollars that we initially said not just for theaters but also on the hotel side for equity investments and things along those lines. And six months into it, while we’ve got a lot that we’re working on, we haven’t had to put any of that money out yet and so that’s why we mainly brought the number down. Gregory Macosko – Lord Abbett: Okay. And yeah, I forgot about the 3D situation. But with regard to the theaters—in other words, the spending on theater is kind of ongoing, normal, kind of what you’ve always been doing?

Absolutely. I mean, we’ve done some—we’re doing some remodeling. We did some—a couple of our locations were due for some upgrades, and we’re looking at some food and beverage expansion, which we’ve always talked about in our strategy as well. And so it’s things along those lines. Gregory Macosko – Lord Abbett: And then back to theaters, are you expecting—what’s the sort of the live event, the tenor there? I mean, has that continued to rise? I would assume that helps the theater tickets a bit too, albeit it’s not that big a piece of things, of total. But talk about that just a little bit.

Yeah, I think your last little qualifier is what really sums it up. It’s not a very meaningful number yet. It continues to grow. It continues to be a piece of it, but the problem with alternative content – the live shows – you think about that. Start with how the dynamics of the movie business, where you get 20 to 30 million people on a weekend being driven by our theaters and the studios’ marketing; and they’re marketing for five shows a day, every single day. So that volume of people in a virtuous circle allows them to—or has them spending a lot of money on marketing because you can—you’ve got a long run going there. Not as long as it used to be, but a longer run. When you’re playing something once in a couple theaters in a market, how much marketing can you do? How big a piece will it ultimately be? Will it be a nice piece? Yeah. But it needs to be stuff that’s not on a Saturday night. We’re not exactly—you know, we’re busy on Saturday nights. We can do stuff for a Tuesday night. Gregory Macosko – Lord Abbett: But if I look at it—I mean, obviously it’s small, yes. But I’m just curious – is the idea that when you play it on a Wednesday or a Thursday or whatever night you play it, does it really bring in—is the house fuller?

Sure. Yes. It brings in the people, and the numbers—some of the numbers get our attention. Like the Glenn Beck stuff, we were like wow, that was pretty good. Glenn Beck does some nice numbers. The Met does good stuff. But you know, it’s— Gregory Macosko – Lord Abbett: One night a week, one night in a week once a month or something like that.

You know, it’s the nice plate of cookies they bring you after dinner. It’s not the full tiramisu, but it’s a nice little shortbread cookie. Gregory Macosko – Lord Abbett: All right, thanks very much.

Thank you. At this time, it appears that there are no other questions. I would now like to turn the call back over to Mr. Neis for any additional and closing remarks.

Well thank you. We certainly want to thank all of you for joining us today. We look forward to talking to you once again in March when we release our third quarter fiscal 2011 results. We certainly want to thank you again for joining us and we hope you al have a very wonderful holiday season and a happy new year.

That concludes today’s call. You may now disconnect your line at any time.